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Spain court says customers must pay mortgage tax

Spain's Supreme Court has ruled that customers, and not banks, have to pay for a mortgage-related tax, a decision that potentially saves Spanish lenders billions of euros in compensation.

Under a previous ruling in October, the court determined that banks had to pay the tax, representing a change in past legal doctrine. Until then, banks' clients had paid the tax.

The court met to make a firm decision and on late Tuesday, in a 15-to-13 vote, decided customers should continue paying.

Spanish bank shares had fallen sharply following the October ruling, as the companies would have potentially faced significant compensation payments were the decision to become retroactive.

Spain's budget minister said the estimated cost of the ruling, assuming four years of retroactivity, could have amounted to 5 billion euros ($5.7 billion). Regional authorities would have had to pay clients, and then claim the money from banks.